Big banking companies add to bad-loan reserves

December 21, 1990|By New York Times News Service

Several large banking companies announced steps yesterday to cushion themselves against rising loan losses, offering further evidence of the worsening loan situation at banks and of how broadly the problems are spread geographically.

NCNB Corp. in Charlotte, N.C., said yesterday that its 1990 profits would shrink because the bank had set aside $55 million to $65 million for bad loans in the fourth quarter.

Most of those loans are not paying interest or are uncollectible. Bad loans will reduce net income this year to about $360 million from $447 million last year, the company said.

NCNB's local unit, NCNB National Bank of Maryland, has eight branches in Baltimore with nearly $350 million in assets.

Atlanta-based C&S-Sovran Corp., parent of Sovran Bank/Maryland, said the fourth quarter would be profitless because more than $225 million was being set aside to cover future loan losses.

"Non-performing loans" -- those 90 days or more past due -- are expected to rise by about $200 million in the quarter.

Also, Standard & Poor's Corp. said it had downgraded its ratings on the senior debt of Citizens & Southern Corp. and Sovran Financial Corp. -- both units of the recently formed C&S/Sovran Corp. -- to single-A from single-A-plus.

The Bank of Boston said it would report a substantial loss in the fourth quarter, although not as big a loss as the $255 million deficit in the third quarter. The bank lost $209 million in the first nine months of the year.

"The prolonged deterioration in the commercial real estate market and the ongoing downturn in the regional economy continue to adversely affect our operating results," said Ira Stepanian, chairman and chief executive.

UJB Financial Corp., which has headquarters in Princeton, N.J. and bank offices throughout the state and in eastern Pennsylvania, said it would cut its quarterly dividend to 15 cents from 29 cents, effective Feb. 1.

Similarly, the Midlantic Corp. of Edison, N.J., said Wednesday that it was eliminating stock dividends to conserve cash.